The scheduled reserve has an economic value since it reduces the outage costs. In several electricity markets, reserve demand functions have been implemented to take into account the value of reserve in the market clearing process. These often take the form of a step-down function at the reserve requirement level, and as such they may not appropriately represent the reserve value. The value of reserve is impacted by the reliability, dynamic and stochastic characteristics of system components, the system operation policies, and the economic aspects such as the risk preferences of the demand. In this thesis, these aspects are taken into account to approximate the reserve value and construct reserve demand functions. Illustrative examples show that the demand functions constructed have similarities with those implemented in some markets.